Help Close the SEC’s Revolving Door

The often cozy relationship between financial regulators and the institutions they monitor is no secret, and a recent report on the Securities and Exchange Commission by a government watchdog group makes a compelling case for limiting the flow of industry insiders between the public and private sectors. The report by the Project on Government Oversight (POGO) takes a look at dozens of examples where an SEC employee’s job before or after working at the agency created a conflict of interest that may have influenced the agency’s ability to regulate.

We asked Michael Smallberg, author of the POGO report, for his suggestions on what concerned citizens can do to help close the revolving door. Start by reading Chapter 9 of his report, outlining the reforms he thinks are needed, or reading our Q&A with him. Then, consider taking a few of the actions he recommends below.

Take Action

Contact the White House and urge them to recruit senior officials from a wider array of backgrounds, not just those who have experience representing corporate interests.

Contact other financial regulatory agencies beyond the SEC (e.g., the Treasury Department, the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corproration (FDIC)) and urge them to enforce the rules and provide more transparency about who goes through the revolving door and the work that agency alumni do for regulated businesses. Smallberg says that one first step regulatory bodies could take would be to publish post-employment disclosure statements online so the public and the press could see which companies employ former regulators, making revolving door politics more transparent.

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